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tv   Today in Washington  CSPAN  May 18, 2012 6:00am-9:00am EDT

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>> if it is true that funding costs will be lower after designation, the primary beneficiaries of that will be the management and the shareholders of these companies. i have been heavily lobbied by these companies to take the position they shouldn't be
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sifis. i'm sure u.s. actual numbers of congress have been levied much more heavily so you may find yourself in an ironic position of someone making an argument to you that you shouldn't do something to their advantage. i simply do not believe for that and other reasons that they would be a significant funding cost advantage. fourth, the additional oversight up like a non-bank sifis must be appropriate to the systemic risk they represent and be coordinated as effectively as possible with their existing regulation. we need to avoid overlap, conflicting requirements and gaps where no one regulates. fifth, similar activities should be regulated in similar ways with similar safety margins to the extent possible, regardless of the legal form the institution doing the activity. otherwise it will be easy to fall prone to regulatory arbitrage as well as the inefficiencies that are produced by arbitrate differences.
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also evaluating the proposed rules in light of these key points, the regulators appear to be generally on the right track. although there's a great deal that cannot be judged yet. the rules focus on the right sources of systemic risk, and they recognize the need to carefully we view the specific facts and to apply considered judgment to questions that are inherently somewhat subjective. it makes sense that the regulators are casting a wide net in the initial phase in order to determine which institutions they will need more information about. as i have stressed, there are no straightforward quantitative methods to find the answers here. so there's a need to gather information on a wide array of candidates for designation in order to assess each in a deeper way. the regulators have also said the appropriate things, but recognizing the diversity of business models in different parts of the financial system.
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although there remains cause for concern as to whether this will be reflected in actual practice i do share that concern. from my point of view i do not think there are currently many to sifis among the non-bank financial institutions. but i would stress as has been an area as much discussion today, it is possible life insurers will fall within it. i would dispute the point made earlier that there's a clear consensus, that life insurers do not present systemic risk. their arguments coming from both sides, which is what i think it's premature to form a conclusion on that. so in conclusion, designated non-bank sifi is by its nature complex endeavor that requires a careful balancing act and substantial human judgment. the rules proposed by the regulators generally reflect those considerations, and i believe the resulting uncertainty about the ultimate
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outcomes is unavoidable. unless we either abandoned the effort to designate such sifis or use cruder measurements that would almost certainly produce worth results. my larger concern as i mentioned is whether the rules might indeed be too eccentric. thank you i will not recognize members for five minutes, recognize myself first. mr. quaadman, although the fsoc has finalized its rules on the sifi designation process and the federal reserve has yet to finalize its rules on enhance prudential standards, as a result no one can actually know what the effect of sifi designation will have a. should the fsoc wait for the fed to finalize this rule on enhanced prudential standards before it begins designating non-bank firms as sifis? >> i think, you know, what is interesting is that while there's a lot of discussion of the process, there's also discussion that you're looking at different companies. big problem of that is poster is
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that we have bank-centric model that is not going to move off of, they are now looking at business models of companies, and they have the sifi companies they should start to look at whether or not there are unique characterizations they should be looking at, as was discussing that with prudential regulators as well. >> thank you. mr. harrington, how often -- individual companies will reduce their likelihood of any future i mentioned crisis? >> i'm not optimistic about that, given historical record and the dynamism of the markets, i think it's very for difficult to anticipate what's likely to happen and what the sources of risk may be. in the near term i think it's likely that there will be heightened scrutiny and some reduction and the likelihood of excess risk-taking, but over time as memories tend to think i think it's likely that we will
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be in and about where the inherent risk will be very difficult to identify and control. >> which you agree that the last crisis taught us that looking at individual companies and isolationism is an ineffective way to look at systematic risk? >> i think it's preferable to try to look at activities, and you can look at companies that are then involved in those activities, looking at individual companies is necessary, it's a part of prudential regulation that i do distinguish that from identifying specific companies and subject to heightened scrutiny. and in the case of the insurance industry, basically federal regulation that could evolve implicit or explicit guarantees of their obligations. >> mr. quaadman, you criticize the fed in your testimony stating that the board appears to be creating a one size fits all bank-centric approach that will not work well with
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non-banks, spanning diverse industries unrelated to banking. what should the fed have done differently? >> i think they should be doing any number of things different differently. one is, you have to look at the fed historically, they are a bank regular. that's what they're used to. that's what they're involved with. if you take a look at a manufacturing company, right, a manufacturing company uses derivatives to actually accept raw materials because they need to lock in prices, and also prevent price voluntarily for consumers, as was have a financing arm to finance the purchase of their finished goods and services, that's a much different model than the bank model. so, the question is when you go to the start of process, and this is an fsoc issue, congress specifically defined what should be looked at in order to determine what company that is predominant asian financial activities. the issue that i just raised
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about the use of derivatives to accept goods, it is specifically not in rag four k. which congress wrote in law. so from there the federal reserve is now expanding out what the regulation should be at the end of the process so the problem here, and this one also raised the issue in terms of the rules being taken out of order, if you start at the beginning of the process, startup a flawed process of review that goes away from what congress defined, then it also affects how the regulation happens at the end and then you overlay on top of that the historic nature of the fed and you create a flawed system. >> thank you. i know we're running out of time but i do want to get your answer on this. how would naming only a few insurance companies systematically important financial institutions upset the competitive landscape in the insurance sector?
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>> there are a couple reasons why. one is it could be the halo effect, where customers, consumers and distributors would think because with implicit settle back and we are therefore better to buy products from somewhere like us if we were named. i don't actually think that's what's likely to happen. i think the other, the opposite is going to happen. we will be held to higher capital standards. we will be seen as an ensure you don't want to buy stock in, but, frankly, you should buy stock in insurance companies that don't have the stands because the capital level will be quite as high. so we think at the end of the day those few insurance companies, which by the way will be the largest in the industry probably, will be somewhat punished by the market place for the higher capital standards. >> thank you. i recognize mrs. maloney, the ranking member, for five minutes. >> first of all i'd like to welcome al all of the panelists, especially mr. wheeler whose company is headquartered in the great state of new york, and i
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want to compliment your many contributions to the economy and providing services to americans. during the financial crisis, we really had only two ways to approach a troubled institution. we could either let it fill, which we did with lemon, or with a braille it -- bail it out which we do with aig. need alternative with a particular good one. what we try to be in the wall street reform act was to have other tools to regulators not only manage large institutions and hopefully make sure they don't fail, but in the event that they did we would have away to structure it like we had with the fdic which i think did a brilliant job in structuring failing banks and putting them with stronger ones, and really managing the economy in a way it was less disruptive. and so, that is what we did. and during the time we did have a lot of debate over insurance companies. many insurance companies
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testified. i don't know if you did, mr. wheeler, or not. but many ceos and academics testified that insurance is not the problem. thathat, in fact, it had been a rock in our troubled economic times and it performed well. with the exception of aig, and although many people agree but most types of insurance activities conducted in isolation would not pose a systemic threat, aig is an important, and i was a tragic example, about insurance activities in combination with other financial risky activities, to literally threaten and bring down a great company, a large organization, and really be a threat to the entire financial system. so the wall street reform act does not exclude any company for that matter, or any area. it doesn't exclude insurance or any type of company because the whole thrust was to make sure
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there were not shadow areas of financial institutions, had a risk-based factor that could do systemic risk to our entire economy. so i'd like to ask the panel, do you agree that a framework that applies broadly and evaluates a number of riskiness measures is preferable to a framework, work that categorically excludes some companies? because under the definition i'm hearing before the panel today, aig would've been excluded because it's primarily an insurance company, that excludes some companies and thereby creates hiding places or shadow places where risky activities could take place. so i'd really like to ask, how is metlife different from aig? and how does your international expansion impact on metlife's
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risk profile? as we know, aag was a very strong international company. so i cut out to anyone who like to enter spent made i will start since you've referenced metlife. of course, what got aig in trouble was it's not insurance activities to the financial products division in london was not inside a regulation insurance activity. and i think the premise of your question makes perfect sense. i think, i think we have to find these areas the shadows. but i worry, is metlife were doing something outside of its regulated insurance activity, which was being very risky and very interconnected i think that activity should absolutely be regulated by the feds. what i worry about is regulated insurance activity, which is not in our opinion systemically risky, and is already by the way
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highly regulated. so i think that's what i think the feds them when they think about non-bank sifis and what kind of activities they should break it i think that's what they should be focused on. we worry about the fact, of the fed getting, being another regular to the insurance industry. >> could you comment on the fact that your firm a quite a good portion of aig, as i understand, in 2010, and what did metlife pay for this acquisition and a the federal reserve have to approve this transaction? was this a decision by your company, or was this part of a government trying to manage risk in the overall economy? >> so, you know, during the financial crisis metlife performed well, and we had, even though we were a bank holding company and eligible for t.a.r.p. money, we did not take it. we were the only large bank holding company that did not. i suppose that's a testimony to
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how we were manage and our capital solvency, but fred i think it's also a testament to the fact we're not very interconnected with the banking system. for problems in the banking sector didn't fell over the coming out of the financial crisis we were in any strong position to aig, they have been taken over by the government can needs to start selling assets to repay the government. we acquired a large international life insurance division of aig for $16 billion. and because we're a bank holding company, the fed did have to approve the transaction and they did the that money was then used to pay back a large portion of the money was used to pay back the treasure. that was good for the treasury. ultimate good for aig to back on its feet and social the stability of the insurance industry throughout this crisis. spent my time is expired. >> thank you. >> thank you, mr. chairman. mr. wheeler come you did a good job of explaining the lack of
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rest with the insurance portion of the financial services industry. i think it's fair to say that the insurance companies are not the product that's when of get into these other financial products, financial services. would that be a fair statement? >> yes. >> does your company engage in any other financial service products other than life insurance? >> we own a small but. >> your small bank doesn't deal in derivatives or swap? >> it does not. >> in your judgment, where do you think, of course i think it's a hypothetical question here, trying to figure out what's going on in the minds of the feds. that's always dangerous. where do you think you should go i guess is the better way to put it, from the standpoint as a ranking member indicated, at least some protections in place or transparency in place to be able to see those groups of folks that are in passionate art in the business of dealing with those instruments, and then how to separate that from folks like
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yourself are not involved in that? >> well, i'm a little worried that the fed is just focus on its your big you must be ipso facto you must be systemically significant. metlife is big. there's no doubt about it. but the insurance industry itself, especially life insurance, probably not very interconnected, probably not systemically significant. if we were to engage in, there may be other non-bank sifis when that's not the case who are not primarily insurance companies, and so obvious a they should be scrutinized. i guess i would also say that if insurers get involved in something besides insurance, which could happen, i i visited an edgy, if they get involved in something else, then that's being a derivatives trader or creator and summer of derivatives or anything else, which really connects into the banking sector, i think that is fair game. i think i should be scrutinized by the fed and regulated. >> so there should be some sort of rules in place that describe the connectivity between your
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activity and the financial services markets, if you go over the line then you fall into category, you should be designated a sifi? >> yes, i do. >> mr. quaadman, i'm just for you. i know that's not the one size fits all and your testimony and the way you put it, approach the fed is taking, what is your solution or what is your suggestion for them, for the fsoc people to look at the regulations and come up with a tiered system, or a system that allows certain folks to get out of it, or to go back and review the existing rules to see how they are negatively impacting some of the small folks that don't need to be in this? insurance companies that are not in the financial services industry. they don't need to be in this. yet there are rules that have been put out so far that it had a dramatic impact on some of
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them. >> sure, thank you for that question. i think number one is they should follow the law. if you take a look at the predominately engage tests which is the first hd the company should even be considered. congress sort of structure that as a one inch pipe another federal reserve and fsoc are trying to make it a 12-inch pie. and want to try to bring in as many companies as possible where it should be done sparingly. i think mr. wheeler also made an excellent point as well. they're also looking at size. size isn't necessarily determinative either. what is also important as well is the marketplace investors and companies, they need to assess how the system works, how to and impact companies and the like by taking rules of order, by not following transparency and writing rules. it's impossible to decide that. one example is vince lombardi when he started training camp every year community this is a football. he didn't start drinking by saying this is the lastly will
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play in the super bowl. so fsoc and the federal reserve is starting at the very end trying to look forward when you should start from the beginning. >> with regards to the promulgation of the rules, the process they're going through, are you, or your associations, are you at the table with the discussions that are going on? >> we have commented extensively. we have met with the regulators in different forms on these issues. >> are they receptive to your ideas and your concerns? >> i can say in this and other areas where we have spoken to them we have always wrought forth how this impacts nonfinancial companies. there are times when a very good discussions but there are also times where it's very clear that they're coming at it from a bank approach and that they are willing to move off of the. >> mr. wheeler? >> i think i would agree with it. we are very engaged. this is very important to us, and dealing with the regulars. we are regulated by the fed
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today so we have a conversation with him a lot. whether we're having an impact, whether they're listening, i honestly don't know. don't know until we get the rules. >> thank you, mr. chairman. >> thank you. mr. manzullo for five minutes. >> thank you. is there anybody in the room here who is from the department of treasury or from the federal reserve? you see, that's the problem. they testify first and then leave, they don't listen to you. the chronic problem with the agencies, they refused to be on the same panel as to those who are regulated. these departments and agencies ought to be ashamed of themselves. because it deprives you of the ability to interact with people that are, that represent the government. that's what mr. wheeler, i asked the questions that you wanted to ask. and that's the problem with washington. that's why the city is broken.
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because people that make the regulations don't think they have to stick around in order to listen to the people impacted. mr. chairman, i would suspect the next hearing we have is put the people impacted first, force the government bureaucrats to listen to the testimony. there's no reason why they should have to go first. and that brings me to another point. it wasn't until october 1, 2009, the fed actually adopted a policy, are you ready for this? requiring written proof of the person's earnings before that person could even fill out a mortgage application. now, i'd say that's pretty basic. they took an entire year to review everything, as chairman bernanke said, a bottom-up review as to what will be necessary. and if it took that long to
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figure out that you don't condone the so-called -- that allow people to do that, i just wonder how the fed is going to start to be able to regulate insurance companies. i've bet all of you generally agree with the exception of mr. elliot who also agrees that insurance companies generally should not be regulated, but may under certain circumstances. can you guys tell me what, what with the fed do in messing up metlife? >> that's a great question. look, as mr. quaadman said a bit ago, the federal reserve, at least part of their mandate is to regulated the banking
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industry. and so the people who work at the fed, that's their training, that's their experience. you know, they regulate banking. so now metlife is a bank holding company and i can tell you, and, therefore, readily by the fed, and i can tell you there was a very strong reluctance on the part of the fed to look at us as anything other than a bank even though of course 90% of our business is ensure and. and we were very frustrated by that, and, of course, that's probably why i'm here today is because of that experience. so i would also tell you that the federal reserve, i have met a lot of people at the federal reserve. i've yet to be somebody i thought had an article a sophisticated understanding of the insurance industry. and so -- >> a mismatch. >> right. so it worries me. we are already highly regulated by the states. the new york insurance department, you know, the state-of-the-art, i would argue
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the most sophisticated state regulator who regulates us today. and they know what they're doing. >> and i asked a question? aig i think was in five pieces of the company. did the insurance division ever, was that ever at risk? or were the requirements so profound that none of these policyholders were in peril at any time? professor? >> if you look at aig's total capital and surplus in its insurance subsidiaries, it was substantially positive throughout the crisis, and the walls were in place that over all if you aggregated across those subsidiaries, aig had plenty of capital to meet its obligations to all policyholders. there has been some debate about the extent to which specific
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subsidiaries may have run into capital shortfalls. and that would raise the question of how fungible the capital held by different aig subsidiaries would be so that that fully capitalize the subsidiaries, the resources, could somehow make up for any shortfall at a few of the entities that may have been underfunded. so that's debate, and i've not seen a real clear coherent analysis that would document whether any of those specific subsidiaries would have actually had a crisis that would have required regulatory intervention. over although there was plenty of money, and the overall system of insurance regulation with the strong walls between the subsidiaries and -- >> so you don't know if those walls could have been breached? surrounding the insurance division. >> they wouldn't have been breached by having money sucked out to support the non-insurance activity. >> make you. >> mr. duffy for five minutes. >> one of the book demands of the financial crisis was aig,
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which was a non-bank financial company. we been such a missile of it but just maybe again at adobe to pick on mr. wheeler who has been asking a lot of questions but what is the difference between metlife and aig in? >> well, i think for purposes of your question, you know, if you look at all the subsidiaries of the holding company, how may of them are engaging insurance amount of them do something else. and metlife, other than the small back wheel which were in the process of selling, because we don't want to be a bank holding company anymore, other than the fact, almost everything we own for the holding companies is in the business of insurance. whether that's pnc and judge or life insurance in this country and around the world. aig wasn't all those insurance businesses as well in the u.s. and around the world, but they also engage in a lot of other what i'll call non-interest activities. and the one that i got so much
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attention of course is something called aig financial products, which was a business they ran in london. where they sold credit default swaps and all kinds of securities. and sold them to banks and other financial institutions comment and when the crisis occurred, therefore they weren't able to pay. and, therefore, threatened to risk security of the banking system, frankly that was relying on that money. so that's the big difference between us. and by the way, most of the insurance industry looks like metlife, okay? the are pretty much pure insurance company. they're not involved in a lot of other activities. >> if you're looking at aig, wasn't the credit default swaps the mortgage-backed security, wasn't that an investment strategy for aig on the insurance side of? >> that's a good question, and we use of derivatives, to come in our insurance entities but i
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think there's something you got to understand here. what the financial products it was create and sell derivatives to others. okay, we purchased derivatives, you know, from wall street, and i'll talk maybe about why that's okay to do. we have to hold collateral against derivative positions. so lehman brothers, for instance, was a big derivative counterparty of ours, when they failed we didn't lose any money because we held collateral against their derivative positions. that's the way good derivative management practice works. we do use derivatives in our insurance company to manage risk. and most major financial institutions do their just investing in derivatives to manage risk doesn't in my mind make you systemically important. >> okay. maybe switching gears a bit. you guys are well aware of the three stage process set up by fsoc for the sifi designation. do you guys as a group of four
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agree with that three stage process? do you think it's a good process to go through? does anyone disagree with the three stage process? does anyone have any recommendations to change for the three stage process? hearing -- you guys don't like a? >> well, look, it's good to have a process, i think. i think it's more about the substance of the decision-making at what we've heard a lot about is, when silva said define interconnectedness. i think that was on the last panel. made measure. they can't. if you think about the sick scratcher they were used to designate something systemically important to talk about bigness been one but almost everything else is very judgmental. and i guess, you know, i'm hoping the fsoc as i would say a robust discussion about those other more qualitative factors. >> mr. harrington? >> that's a great question. number one, if congress had a process in place to do this
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system and the regulars had to go run. i think one thing also to think about, and i think this also gets overshadowed by the general financial crisis, if you look back a few years ago there's a problem with monoline insurance companies that led to liquidity problems and state in a civil securities, right? that's a $3.6 trillion market. i think the question you should be asking the regulars is, could they find a problem with monoline insurance companies with the processes they have set up? because if you just look at size, trying to use a searchlight windbag you probably should be using a flashlight. >> in general, the three stage process is sensible. actually having a process wherein the first page you get the right criteria and the right -- that's very difficult and i don't think there's sufficient information to evaluate the specifics in the first stage.
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i am troubled by the overriding amount of discretion, including the fact if you don't meet the first stage test you can still be through the screen. and four to i don't have any sharp ideas how you would fix this to optimally trade off the specificity that would be desirable versus some degree of discretion. >> one more question. would everyone agree that non-bank financials should be considered a sifi? and do you guys all think that's a reasonable area for us to look at? or does anyone on the panel sake no, we just want to look at banks? >> no, no, no. i totally agree that is necessary, that we catch these activities in the shadows. >> it could be done to exacting standards. be used sparingly but when it's appropriate spent i'm very skeptical of identifying --
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because of the destruction's you can create in competition and incentives for safety and soundness. i wish more attention would be paid to looking at how we might do this without identifying specific a priest but instead looking over all at areas that could create systemic risk and having some sort of supervisory regime that could deal with that without labeling companies as systemically significant which ultimately will translate into backed by the states and founders of the federal government. >> i don't see a way to do what he is just described. ultimately, we need each of these institutions to be able to handle the claims on them. so in the end we have to say, these institutions have enough capital, enough liquidity, in a safety margins in general. >> my time has expired. i will yield back. >> i want to thank all the witnesses for the testimony this afternoon. the chair notes that some members may have additional questions for this battle which they may wish to submit in
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writing. without objection the hearing record will remain open for 30 days for members to submit written questions to these witnesses and place the responses in the record. this hearing is adjourned. [inaudible conversations] >> c-span congressional directory is your complete guide to the 112th congress. inside you'll find information on senators and house members including contact information and district maps. plus information on cabinet secretaries, supreme court justices and the nation's governors.
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pickup a copy for $12.95, plus shipping and handling. order online at >> in a few moments, a hearing on government backing of alternative energy projects. into a half hours a couple of political events. a short news conference with gop presidential candidate mitt romney followed by vice president joe biden campaigning in ohio.
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>> this memorial day weekend on c-span we will take you to colleges and universities around the country to your commencement addresses from members of congress and the president's cabinet, state and local leaders and business executives. we also want to hear from you about your commencement experience. did you graduate from college this year or attend a ceremony for a friend or family member, or maybe something about a past commencement that sticks with you. we want to hear from you. call us and tell us your story. we may use your comments on the air. that's (202)643-3011. >> house republicans again this
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we criticize the energy department for backing loans for alternative energy projects including those to the now bankrupt company solyndra. the house subcommittee on stimulus spending look at other green energy companies receiving government support. this is two and a half hours. >> [inaudible conversations] >> let me thank all our witnesses for being here. we have come you how this works. you've got to listen to ask of a unjust beaches before get to your important as money, so bear
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with us and we'll get to you as quickly as we can. before we get opening statements i would ask unanimous consent that our colleagues in south carolina he allowed to participate in today's hearing. without objection, so order. we'll start with opening opening statements you print is that the chairman from the full committee and the ranking member of the full committee i think joining us so we'll probably have for opening statements the president obama's 2000s dimmest directive nearly 90 billion of taxpayer funds toward green initiatives. the president of the american people that quote green jobs would be a major force not just for environmental conservation but for economic as well. the president said that we will harness the sun and the winds and the soil to our cars and one-off factors. he promised the country would create millions of jobs which will help us compete in the global economy. however, to reach into this camp available evidence demonstrates these efforts have wasted vast sums of taxpayer money and fail to achieve stated goals but
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today's hearing continuation of the work done for the full committee and this subcommittee seeking to ensure that the american people know how the money is being spent. for of the compass test site before the subcommittee today about, first solar, geothermal and brightsource punitively received 5 billion in loan guarantees from the department of energy. one-third the entire loan guarantee portfolio. i want to thank each of these companies for testifying today. i know many of you had to travel a great distance. alternative energy has a place in our economy and we hope that all these companies succeed but the best way to get cheap energy to american consumers is to let the market forces work, not to allow bureaucrats in washington to select who wins and who loses. i also want to thank our other witnesses for appearing today, especially mr. nelson, ceo of solard 3d. billions of taxpayer dollars are not necessary to advance green technology. taxpayers lost over half a billion dollars on slender and
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obama administration said it was just one bad apple and the rest of the portfolio was strong, is becoming increasingly clear that celinda which is the tip of the iceberg. too often this administration takes liberties with the american people's money based on the assumption government knows best. today without understand what happened the federal government tries to play. with that i would yield to the gentleman from ohio, my good friend from cleveland, mr. kucinich. >> thank you very much. good morning, mr. chairman. members of the committee and to our guests who are testifying in a moment. i'm grateful for today saying because i think it will serve to dispel the misconceptions about the department of energy's loan guarantee program. recognizing that energy independence is critical to america's future, congress created the loan guarantee program in 2009 to support innovative energy projects that involve more risk than is
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typical for project and corporate finances. my friends in majority would can duplicate the wealth publicized bankruptcy of deacon power and solyndra threaten to tank the department of energy's entire loan guarantee portfolio. in reality, the department of energies 1705 loan guarantee portfolio program is doing better than congress expected when it established the program. when congress created the 1705 program, with appropriate about to .47 billion credit subsidy costs as an insurance fund to cover potential losses stemming from losses and projects receiving loan guarantees. that means congress prepared for losses to reach about 18% of total loan guarantees provided by the program. in reality actual losses are about 3%. that means the department of energy's rigorous and thorough due diligence process for choosing among applicants result in safer choices than congress had anticipated. my friends on the other side of the i'll have singled out for
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scrutiny federal support for renewable energy technologies. i note they have not raised questions about the last 100 years of subsidies to promote the development of fossil fuel technologies. and i have not heard of any committee investigation into subsidies for the nuclear energy industry either. even though in february 2010, a single nuclear project received a $.33 billion of subsidies. investing energy independence is critical to america's national security, its economic growth and future job creation. if we fail to support these emerging renewable energy technologies, our country will fall behind countries like germany and china. if anything, we do not do enough for renewable energy. especially when compared to support for oil and gas. i've got a chart i would like to
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put up, if we can do that. this chart attached to my statement, mr. chairman, shows how much greater is the ongoing support for the oil and gas industry, compared with renewable energy technology. so what i'm wondering is why my friends have devoted for hearing, including today, to criticize renewable energy companies have received federal support as congress intended to in a well managed program and has returned better results than congress had anticipated. i think we should be helping preserve america's leadership in the technology that will only become more affordable, not less in future to impugn the reputation of these companies before television cameras will not be productive. so with that i want to thank my friend for calling this hearing, and i yield back the balance of my time. thank you. >> does anyone wish to make an opening statement on the majority side? our chairman is not yet with a so we will proceed with members
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who may have seven days to submit opening statements for the record. we now want to welcome our panel of witnesses. we first want to have come introduced mr. james nelson was the president and ceo of solard 3d and corporate. we also have gregory kats,yñyñyñ president of capitol v. mr. greggyñ would so is theyñyññ president and ceo of aboundyñyññ solar, and mr. brian fairbank is president and ceo of nevada g. -- nevada geothermal power. and mr. michael ahearn is chairman of first solar. and, finally, mr. ward isxóxnxóí president and ceo of brightsource energy company. the committee rules require that we have witnesses sworn in, so if you just stand, raise your right hands. [witnesses were sworn in]yñyñyñ >> let the record show that all witnesses answered in the
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affirmative. again, thank you all for being here. you guys i think have got to understand the role. you have five minutes, be a little thing it close to five as you can do it. the goal is to get out of here by noon if we can today. i note i have some to be killed at 12. so we're going to go right down the line. [inaudible] [laughter] >> even though i disagree with some of his statements in his opening statement. will go right down the line answer with mr. nelson. you get your vitamins and we'll go right there at the we will get to questions. you are recognized for five minutes. >> thank you. the green energy policy includes two parts with the aim of develop a new green energy technologies, and to is making a loan guarantee to promote the adoption of green energy technologies, supporting research is an important role of government with a loan guarantee
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program as a wasteful mistake because it doesn't work. having spent most of my career developing strategy for companies large and small, i have learned one important thing and that is that it is economics, not government policy that drives behavior. and is economics not government policy that will drive enthusiastic adoption of green energy. my company solar 3-d is a technology development company in santa barbara, for you. we're developing advanced technology and new solar cell that would reduce the cost of solar energy by about 50% of our objective is similar to that of ill-fated solyndra. to develop new solar technology that can change the economics of the industry but however our manner of execution is different. we have been supported by private investment in our country since establishment in august 2010 but were not dependent or depending on government funding. we certainly do not expect such support will be necessary to facilitate commercialization of our new technology.
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our go to market strategy will be to partner with a comment that has the know-how to manufacture products similar to ours. while the 3-d solar cell is unique concept, our engineering approach has been to design a product with existing equipment, methods of facilities in my. release our facilities and were able to pay the university of california for the use of higher level clean rooms and let's our initial work and design technology. these measures keep our capital costs low. we keep our staff lean, and hiring key personnel for full-time work and then we use consultants to keep our operating costs low. by contrast, solyndra's unique technology attracted a $535 million loan guarantee but there were many problems that happened as a result of their strategy. one is that they had to use all new machines at a second one is big of a brand-new hundred thousand square foot is still of the, complete with whistling robots. three is that even wins the award was granted it was clear
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that the operations was fading. and find it was reported that bonuses were paid to the executives despite the poor performance. the department of energy's loan guarantee to slander was an embarrassing example of the current system. me investment was undoubtedly scrutinize and rejected by nearby silicon valley venture capitalist, organizations abundantly more qualified white and for good investments than government committed. there was no urgent strategic need for the u.s. to have solyndra rush to market. the decision to fund selectors attempt to commercialize does not stand up to reason. however, politics ultimately trumped reason. the bureaucrats awarding the financial aid were beholden to their political goals. supervisor promised americans that they're going to fix the u.s. economy by creating millions of green jobs. something that could not possibly happen in any timeframe worthy of consideration. the price of solyndra's failures
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was born by the the american people. as solar 3d's current level of development, our company has a much better chance than solyndra advocate of creating a game changing technology. we have reached this point on the principles of free enterprise of risk and return. without the use of government a. in the end we will become commercial for less than $10 million with the hope of creating a technology that would change the landscape of solar energy. it will be an example of the amazing american economic system at work. government has a legitimate role in supporting basic research. rpd, the program which were small tranches of money for basic research and develop an alternative energy will receive $250 million in funding this year, which is only half of what we lost on the solyndra project alone. this program can and should be expanded. it's objective is to fund innovative technologies that will improve the economics of alternative energy, which is
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ultimately the only path to widespread adoption of clean energy. the loan guarantee program should be retired prominently. the path to commercialization requires brains, discipline and create. it is rarely aided and often impeded by government involvement in our government should trust the free market forces that have made america great. ultimately, our country is at best in renewable power, must help us become more globally competitive. job creation and other ancillary goals are byproducts of renewable energy growth and are worthy objectives, but simply come as a result of successful businesses. e most important reason to invest is to get control of and reduce the cost of power and generation in our country to the desire for more jobs and deployment is a political and social desire, not a business desire. i have a simple review of the d.o.e. website reveals that about $16.6 billion has been put out in guarantees in the 17 '05
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program and has created 2400 jobs. that $6.3 million per permanent job. it is not an economic program. businesses are not made successful on more jobs. people get shot by being competitive in the free enterprise system, by preparing themselves to be employed and to be better than the existing candidates. renewable energy should be the same, by being great and productive and renewable energy we need to produce the best problems -- products and the best prices in the world. that means we need to get better operationally. >> thank you, mr. nelson. mr. katz, you're recognized. >> thank you very much. thank you very much for the opportune to speak on these important issues today.
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a hearing addresses several questions. one is a d.o.e. loan guarantee program successful financially, specifically does the program meet or fail to meet its financial objectives. too, is a d.o.e. loan program successful, specifically does it meet or fail to meet additional objectives including strengthening job creation security competitiveness. the program has three parts, two of which were established in the george w. bush administration, and one of which was established in the obama administration. section 1705 of the d.o.e. loan park was established through the 2000 american reinvestment and recovery act as part of a far larger program to accelerate u.s. investment and employment in response to the 2008-2009 deep economic downturn. federal loan guarantees, like 1705, are established to enable financing of projects that would
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otherwise probably not receive financial funding. and other like other bank and government lending programs, it assumes the default rate is normal and is expected inception 70 '05 loan program. for example, the office of management project predicts -- defaults and solyndra in beacon after some funds are recouped from both parties are likely to net out to about 300-$400 million. this is roughly 2% of the amount guaranteed if there are no more losses, then the program would have to be viewed as a resounding success. while it is easy in hindsight to criticize d.o.e. loan program, the only fair basis for judging success or failure is whether the program achieve its financial objectives. review of the loan portfolio outstanding suggests how defaults are ultimately likely to be in the range of
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400-$800 million, or about one quarter of the about projected and budgeted. based on original assessment of outstanding portfolio financial profile and risk the d.o.e. loan program could therefore rationally only be viewed as a big success. there are other objectives including security. the army and navy both have net zero programs aimed at reducing energy use on military bases with the navy targeting at 50% of its bases to have zero net energy consumption by 2020 from a combination of renewable energy and energy efficiency. energy is in the words of admiral mullen, about not just defense but security. not just survival but prosperity. national defense infrastructure and systems hold the potential and admiral mullen's words to help stem the tide of strategic security issues related to climate change, while improving operational effectiveness. the wind and solar innovation
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and industries were largely developed here in the united states. but our major competitors, including china and germany have through sustained federal subsidies and purchases rapidly expand the size and strength of the domestic wind corporation. today, a top 10 global wind and an effects, only one of each is located in the united states. we should be deeply concerned about the security implications of the u.s. losing its global competitive leadership in these critical industries. broad public support for expanded spell investment in renewable energy reflects this understanding. china and germany are out investing as i'm given to strategic and security importance of clean energy industries. weakening federal support for the u.s. with pb and other industries undermined u.s. competitiveness and security. for security and financial reasons peel -- ua should use
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85% of its 1705 funds are still unused is still able to trade to fulfill its purpose of funding and supporting additional u.s. clean energy technologies and companies. default in the 1705 program to date have been far below projected. we expect over time to be a total of 11 quarter of what is budgeted. the clear financial success the implement and secure benefits demonstrated by this program demonstrates that the d.o.e. should ramp up its loan guarantee efforts and provide loan guarantees support for roughly another 30-$40 billion of u.s. clean energy projects and companies. the d.o.e. is 70 '05 loan guaranty program provides an important lifted clean energy investment growth, both strength and job creation and supporting the strengthen u.s. clean energy industry but our main train competitors, including china and
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germany, are out investing us given the strategic security and employment importance and use clean energy industries, weakening federal support for the u.s. wind and solar industries, undermined u.s. competitiveness and security. if the u.s. military is forced it needs to achieve its mission, a shift into clean energy, it will weaken the u.s. security. for financial security employment and competitiveness reasons, the d.o.e. should use e85% of its funds unused and still available to backstop u.s. energy companies and projects, and given the clear success of which alone for program today, based on rational measures of financial performance and other measures include security implement and competitiveness, the largest risk is that d.o.e. has slowed its loan guarantee program. failing to make substantial additional loan guarantees to expand renewables in clean energy, strengthen u.s. jobs, competitiveness and security would be an irrational and costly failure. the losers would be u.s.
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industry, u.s. military, u.s. taxpayer and the u.s. workers. the only beneficiaries would be china and our other international competitors. thank you. >> thank you. >> mr. chairman, members of the subcommittee, my name is craig witsoe. since november a flash i been ceo of about -- >> can you make sure that red light is on? >> my name is craig witsoe. since november a flash i been the ceo of a abound solar, an emerging u.s. technology company that manufactures solar panels in colorado. we haven't are in the% in colorado as well as a factory. we also have a glance at any until the our second u.s. factor. about is a much an american star. our company stemmed from research start in the late '80s at colorado state university. early funding came from the national science foundation as well as the national renewable energy let. -- >> twice like that over.
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usually we don't have it humming spent in 2007 it was start to commercialize a very innovative research. abound produces thin film cadmium, can't tell solar panel. using proprietary advanced manufacturing processes in closed face sublimation, this technology invented by abound allows fabrication of all critical semiconductor layers to one continuous piece of equipment. ask you, cadtel can be produced lower than crystal and silicon modules produced by many chinese compass today. abound is one of only three companies in the world that have significant transient experience. first solar also uses cadtel and acts of seven months ago general electric announced it would also use cadtel in this technology of choice for new solar module factor in colorado. >> i'm going to interrupt for one second. if it does about you or anyone
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else, gravity of the microphone and turn your saw. see if that helps. know, use mr. kats mic. try that we don't have that. spent is that better? >> i think so. >> as i said, ge just announced it would use cadtel in its technology of choice for new solar factory in colorado. first of all, three of these countries our american friends. i met other technologies by chinese topic of what they're using to dominate our markets. actually crystal on silicon was invented in america by bell labs in 1954. for julie many believe that americans can still win in the long run with new technologies like cadtel. in fact, within recent weeks about along with first solar and she has been solicited to collaborate with the u.s. pv manufacturing consortium to help accelerate u.s. advancement of this critical technology for the
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future. this is not unlike initiative started in 1987 which helped recapture the u.s. semiconductor manufacture. abound has attracted more than 300 million in private investment. in 2009, abound also applied for additional funding to expand and upgrade our capacity to the 1705 d.o.e. loan program. ..
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>> fell 50% as a result of unprecedented discounting by chinese solar panel companies. abound believes at scale our modules can compete with any other global company, but with a reported $34 billion in subsidies behind the chinese be, it's very hard when the competition is a country and not just a company. extreme price actions has hurt many american manufacturing companies including abound. abound in february of this year made a very difficult decision, and that was to shut down our current generation module production in order to accelerate development of around next-gen85 module. while this resulted in the temporary elimination of 180 full-time and 100 part-time
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jobs, we do believe this next generation module can create more jobs in the future. abound's progress has been made possible by 300 million of private investment and 70 million from the d oh, loan. doe loan. u.s.-invented crystal silicon technology, but while this american invention has turned into chinese industry, we believe the can still win in the future by developing and scaling newer technologies. at scale our solar panels can be built by american workers with good-paying jobs at lower cost per watt than competing crystal and chinese panels. today technology start-up companies come with significant risks. we know that. the recent aggressive price actions from chinese companies do threaten to prevent innovative companies like apound from achieving needed -- abound
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from achieving needed scale to win. there are difficult for abound and other module suppliers. the technology advances we have made can be critical elements to the u.s. regaining a competitive position in the global market. as we work to launch the next generation of solar module with the use of private finance, we are determined to continue to advance this technology to help turn american inventions into american industry. thank you. >> thank you, mr. witsoe. mr. fairbanks. >> good morning, mr. chairman, and members of the subcommittee. how's my mic going? it's my pleasure to appear today as a representative of nevada geothermal power and the blue mountain facility and to speak with you about the many good things occurring at blue mountain, what's occurring at the plant, in the nevada region and beyond. these positive things are a result of the hard work of the
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blue mountain employees, the support of civic leaders and ordinary nevadans, the dedication of trusted lenders and, of course, the 1705 loan guarantee program. by way of introduction, i am the president and ceo of nevada geothermal power inc. which is the ultimate corporate owner of the blue mountain faulkner i facility. i am a geological engineer by training with over 30 years of geothermal engineering, exploration and assessment experience, and the past president of the canadian geothermal energy association and currently serve on the board of the resources council based in california. my geothermal experience has taken me around the world and has included by way of example participation in the discovery of canada's -- [inaudible] geothermal area in the late '70s, geothermal resource exploration and evaluations
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throughout north america and central and america, participation in the development of a national power plan for kenya and consultation on their geothermal plants and extensive geothermal experience throughout the basement range, geologic province of nevada. before delving into the specifics of the blue mountain facility, i think it worthwhile to briefly describe the nature of geothermal power and why we are so optimistic about its future as a clean, reliable source of energy in the united states. geothermal power's a unique source of renewable natural energy that is a product of heat generated by and stored in the earth. the earth's core is continually producing enormous amounts of heat, primarily by means of decay of radioactive materials and, secondarily, by emergency left over from the earth's formation. heat generated in the earth's core is conducted upward in the crust.
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under certain geological conditions such as the placement of shallow magma chambers along young volcanos or thinning of the crust in rift belts such as occurs in nevada, rock and water and the earth's shallow crust is sometimes heated to a very high temperature. surface manifestation of the underlying geothermal energy range from shallow, hot imrowppedwater, hot springs or -- [inaudible] we are all familiar with some of the famous examples of geothermal energy in action such as volcanos, mount st. hellens comes -- helens comes to mind, other hot spring areas. advances in technology now allow us to harness the heat stored in the rock and water and convert it to electrical power that can be used to power our cities and industries without pollution or side effects. this is not a simple task, but one that we are committed to.
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geothermal power plants are base load, operating nonstop, 365 days a year at around 95% availability. other sources of natural energy such as wind, power, solar power and hydroelectric power all operate at lower capacities. and because they require no fuel to operate, they're unaffected by fluctuations in prices, produce minimal harmful emissions and have a very small surface foot print. geothermal energy is, thus, a natural, clean, renewable and efficient source of power, the potential of which we have only just begun to tap. ngp's team consists of outstanding, dedicated individuals who are true experts in their respective fields. our technical leaders have over a century of combined experience in the geothermal community industry and are universeally respected. relating to this morning's
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focus, ngt blue mountain i llc covers eight sections of land and additional private geothermal leases covering nine sections of land for a total of 17 square miles. our leases include the production rights and surface rights necessary for the power plant and well field activities. the leases are situated with no competing geothermal leases in the area and no known environmental or other impediments to current or future drilling and plant operations. the blue mountain geothermal resource represents the first new discovery of a geothermal site in the western united states in 20 years. today blue mountain is one of the largest binary cycle geothermal plants in nevada. the blue mountain project was helped by the doe loan guarantee program which backed the loan by john hancock. the facility's operating capacity is sufficient to service the hancock loan through its remaining term.
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no taxpayer dollars have gone towards servicing the hancock loan. but our strategic plans are more ambitious than merely producing power to meet our loan commitments. we continue to work actively with independent engineers to understand and utilize the geothermal resource at blue mountain. we remain bullish on the future geothermal resource potential and are working on a plan to construct new northern injection wells and one new production well to achieve a target of 52 megawatts or 41 megawatts net to the grid. these growth plans are possible only because of the solid foundation that has been put in place by the hard work of nevada geothermal power employees and the financial support of our lenders and, of course, the loan guarantee put in place by doe. thank you for the opportunity to speak with you today about ngt's blue mountain prospect. i am enormously proud of our accomplishments at the geothermal site and look forward
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to many years of clean energy production at this facility. i would be happy to answer any questions the members of the subcommittee might have. >> thank you, mr. fairbanks, mr. ahern. >> my name is mike ahern, thank you for the opportunity to appear before the committee today to offer my perspective on the the president of number's loan -- department of energy's loan guarantee program. first solar is one of the largest solar module manufacturers in the world, and the global leader in developing and constructing utility-scale photovoltaic power plants. we've represented an estimated $15 billion or more of solar power installations. we are head quartered in tempe, arizona, and our manufacturing centers are located in ohio. in addition to our 1800 associates in the u.s., our manufacturing and project development activities support more than 7,000 additional u.s. supply chain and construction jobs. last year alone we pent more
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than $1 billion with u.s. suppliers in 35 states for everything from glass to steel components. we trade on the nasdaq, and we are currently the only renewable energy company be listed in the s&p 500. first solar's success reflects over two decades of entrepreneurial struggle, innovation and public/private partnership. our technology was developed in the early 1990s in partnership with the national energy renewable laboratory. in 999 we formed -- in 1999 we commercialized the technology. a project we thought would require two years and $40 million ended up requiring six years and over $100 million as we solved the problems typical with start-up companies. after solving the core commercial problems, we grew exponentially. aided by generous market subsidies in europe and technical assistance from --
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[inaudible] national laboratory and brook haven national laboratory, we scaled our annual production volume from 20 to over 1100 megawatts, expanded our work force to over 2,000 associates, reduced our manufacturing costs by nearly 70% and established ourselves as the global industry leader. in 2008 we decided to expand beyond manufacturing and selling silver modules to become the first company to engineer and construct large pv power plants for the utility market. photovoltaics to that point had been largely regular gated to smaller systems and were generally considering too costly to compete with wind and geothermal power. we vertically integrated our business into the design, engineering and construction of solar power plants, and in parallel we implemented a number of r&d programs and initiatives to reduce costs, improve plant
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reliability and e educate ifively -- effectively integrate large solar plants onto the grid. now with other two gigawatts of plants completed, we have demonstrated our ability. our advanced technology, innovative system designs and economies of scale have enabled accelerated construction cycles. our plant monitoring and control capabilities have validated the reliability and great compatibility of our power plants. by consistently deliver canning on our promises, we've earned the businesses of some of the most respected companies including next era, pg&e, semipa, southern california edison and midamerican. these accomplishments have enabled us to expand to new markets across the globe without the need for expense bive solar subsidies. our success story came close to ending in early failure.
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the financial sector meltdown and economic downturn of 2009 jeopardized the entire market for new energy including first solar's efforts to enter the utility market. the timely and effective intervention by congress through the american recovery and reinvestment act, by the treasury department through the section 1603 program and by the doe through the loan guarantee program helped to assure near-terminally quiddity in the project finance market and fostered the development of more robust private be finance markets. these initiatives acted as both a lifeline and a bridge to the future, and for that we are sincerely grateful. in recent months, the european solar subsidies have declined sharply, impacting first solar and the rest of the industry. however, largely because of our successful expansion into the utility market, we remain strong and well positioned to execute through the current market environment. i'm aware questions have arisen
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regarding the doe's loan guarantee program including questions about first solar's applications. first solar worked diligently and transparently to assure sound results were achieved for each of these prompts. i would like to thank the committee for the opportunity, and i welcome the chance to answer your question. >> thank you, mr. ahearn. mr. woolard, go ahead. >> i have two decades of experience in the energy and environmental sectors asen texive, a entrepreneur and an investor. brightsource designs, develops and deploys large-scale, concentrating solar thermal technology -- there we go. to produce be high value steam for electric power, petroleum and industrial process markets worldwide. our technology is very different from solar, photovoltaic or -- [inaudible] energy. our project, thousands of
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mirrors continuously track the sun throughout the day, and we focus light onto a solar receiver which sits on top of a tower. we generate power similar to coal or natural gas. by creating high temperature steam to generate electricity. our technology has been tested and proven in the field to the satisfaction of several independent engineering firms at two smaller-scale facilities. our part 234ers and investors include some of the world's best known companies including private be equity firms, chef von -- chef von, bp and google energy as project investors. we have one of the largest portfolios in the united states of signed utility-scale power purchase agreements. first, i'm pleased to report on the -- [inaudible] project with construction management that is on schedule and within budget. we expect to deliver power to the grid by early next year. generating self-power to pacific
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gas and electric in southern california edison under three of 13 power purchase agreements that we have signed with those two large utilities. in total, the project will cost about $3.2 billion to build, and at 392 megawatts, will produce enough power for 140,000 homes each year. we've procured from a supply chain that stretches across 17 states. the majority of the materials used to build a product are domestic, and 70% of the project's value will be captured in the united states. the project is creating 1400 construction jobs at peak. the project will generate $250 million in earnings for these construction workers and will produce 650 million for workers on the site including the 90 permanent jobs required to operate the plant. in addition to the supply chain, investment and labor wages, also state and local tax revenues over its lifetime.
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large energy infrastructure projects typically use project finance to provide the funds they need for construction. the company is jointly owned by energy, google and brightsource. these equity investors have collectively committed $598 million to the project company. under the doe guaranteed loan, the project company is the borrower and has contracts with the two largest utilities in california to sell all the power at a fixed price for 20 or 25 years. these future cash payments back the loan repayment. brightsource first applied to prequalify for a doe loan guarantee in december 2006, proposing to use a project finance structure. in april 2011, four-and-a-half years after we first applied, our loan guarantee transaction closed. during that period, brightsource funded well over $2 million of independent review by finance and legal firms selected by an operating --
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[inaudible] on behalf of the doe. the loan guarantee programs serve an important role in the market allowing our technology and product to achievement and meaningful scale, validate our technology and enable a new industry to succeed. in short, creating the necessary conditions to allow commercial financing. going forward, we expect to finance all of our future projects commercialically. at brightsource we are proud of our company and the project. i appreciate the opportunity to address the subcommittee and welcome any questions you may have. >> thank you. i thank the gentlemen. i thank all of you for your testimony. mr. woolard, do you agree with mr. kats and mr. kucinich that the 1705 program is working and has worked well? yes or no. >> i believe that the project works very well for project financings where you have a large utility -- >> and do you think it worked well in your particular case? i think on page 5 of your testimony, and i'm quoting, the doe's process was extremely thorough and marked by thoughtful analysis, so you
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thought it worked well in your situation -- how much money did you get? >> i fully agree with that statement. we got $1.6 billion. >> thorough and thoughtful analysis is your statement here. and is -- do you believe think of the, do you believe you were receiving the loan guarantee, there was political influence involved in that decision, or was it based completely on the merits of the project and your particular company, brightsource? >> i believe it was completely on the merits of the project. we started the application in 2006 and went through a four-year cycle. >> okay. well, this is where i'm confused because you guys gave us 30,000 documents on friday, and i want to put the first e-mail, if i could. today you're telling us it was thorough and thoughtful analysis, and yet we have this e-mail correspondence between you and matt rogers, senior adviser to the secretary of energy for the recovery act, so this is the guy who decides things. you say in this e-mail, i think
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it's interesting, please, don't distribute this. we wouldn't want the taxpayers to know what's going on with their money. but down in this e-mail, the last sentence you said department of energy's credibility is thin, and i'm currently trying to put off communications with people on the hill. so which is it? today you say they're thorough and thoughtful, but when you're trying to get the money, you say their credibility is thin. which is it? >> i never said they were fast. so as we -- >> well, no, no, no, this is not about timing, this is about credibility. you used the word "credibility" in this e-mail. >> it is very much about timing, and if you'd allow me to explain, we had actually invested quite a bit of money at brightsource in moving the project forward, and the government had, we had a conditional commitment, and the transaction had been contemplate today close in september of -- sorry, my eyes can't -- >> january 4, 2010. >> yes, september 2009.
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>> let's move to the second thing because you just said it was completely based on the merits of the project, but you say -- can you see the big print where it says also that last paragraph, next to last paragraph, where it starts with also, can you read that first paragraph for me? >> also darby and pg&e? that sentence? >> yes. >> talked directly to obama about the -- >> who's the darby in that? is that the head of pacific gas and electric? >> yes. peter darby was ceo of pg&e -- >> and they had a vested interest in getting this thing approved because you were providing them their required commitment for power, right? >> yes. >> and is the obama in this sentence, in your e-mail, sent to the guy, is the obama the obama i think it is? that's the president of the united states? >> yes, i had been told -- >> wait a minute. just a minutial you told me there was no politicallen nuance, and yet in an e-mail you
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reference the president of the united states who just had a direct conversation with the guy who cares pretty deeply about this thing getting approved. so again, which is it? >> for our project -- >> was it based on the merits, and were they thorough and thoughtful, or were they no credibility and based on politicians? >> our product, i can assure you -- >> why did you think it was necessary to tell the guy who makes the decision that a guy you know pretty well talked directly with the president of the united states? >> mr. chairman, with all due respect, what i believe -- >> i'm just trying to clear up the confusion. >> i'd like to help. what i believe that peter darby was saying -- i don't know -- was that he had many projects under this loan guarantee program, i believe a significant portion of many of his projects was dependent on this -- >> but the key is you thought it was important enough to cite in an e-mail to the guy who's in charge of making the decision, and one month after this e-mail you got the conditional approval.
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let me go to the next e-mail, if i could. this was just amazing to me. it's another e-mail from you to jonathan silver, executive director of the loan guarantee program. and the e-mail you start off, please see below a draft of the e-mail our chairman, john bryson, who's now the commerce secretary, chairman of your board, is preparing to send to the white house chief of staff, bill daley. so you're asking the guy who's in charge of making the decision, now you're past the conditional, this is the final guarantee, you're asking the guy to proofread an e-mail that your chairman's going to send to the white house chief of staff. and you say there's no political involvement? i mean, this is amazing. the person who makes the decision, this is not some kid asking their mom to proofread their homework, this is the taxpayer dollars by the guy who's going to decide, and you're saying, hey, can you proofread this? because we want our chairman, who's going to be the next commerce secretary, we want him to send a led tore the white house chief of staff, and you just said there was no political involvement in the decision to
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give your company $1.6 billion of taxpayer money. >> i believe everything we did in our project was fully on its merits. it's a very solid customer. >> i think it'd be interesting -- do you think it's customary for a company to be able to say to someone who's going to decide whether they get a loan guarantee or not, hey, proofread this letter that we're going to send to bill daley? be that's unbelievable. >> i believe that the letter that was contemplated to be sent was all around the program itself and making sure that the program -- >> well, you read this letter, we need guidance and support from the white house, you know? that's amazing. dear bill, we need a commitment from the white house to quarterback the loan closure by march 18th. mr. chief white house chief of staff, can you approve this by a certain date? be we need this. unbelievable. let me just put it one last thing because i know i'm out of time, and i want to get to the ranking member. let me put up -- we have the chairman of the full committee here.
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we had -- i want to put up what the secretary said to us just two months ago in questions that i asked him. mr. secretary, how about john bryson, former chairman of the board at brightsource, now the secretary of commerce? did that in any way influence your decision to give a loan guarantee to brightsource? secretary said, no. white house, did the white house ever call you about, talk to you about any of these respective companies involving these individuals? did someone from the white house, chief of staff, someone from the white house call you? and the secretary said, no. mr. chairman, i think we've got to have the secretary back in here because this is certainly his response to those direct questions certainly doesn't square we mails we got in a batch of 30,000 documents on friday from brightsource -- >> would the gentleman yield? >> be happy to. >> i will commit to you today that we will invite the secretary back to clarify the record along with letters to the administration, asking them to waive the normal presidential
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exclusion of conversations since it's clear that there was direct conversation leading to a form of favoritism for brightsource. we'll ask the president to give us the records of those conversations with pg&e and others. >> thank you, chairman. mr. chairman, i would just ask this, too, to my knowledge, this is the first time we've had any direct link to the white house in the 1705 program, is that correct? >> to my knowledge, this discovery is the first. >> and i've went over time, and i'll be generous with the time to the ranking member, gentleman from ohio -- >> mr. chairman? if i could ask unanimous consent for just to place my opening statement in the record and to include clarification as to the ranking member's slide he used in his opening statement. i'd like to, if you will -- and this gentleman from ohio is my dear, longtime friend -- but i think we can shed light on the fact that those ratios, if
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stated effectively, including the fact that the oil industry only receives a 6% credit under 199 where any o other manufacturer such as those in your district, mr. kucinich, receives a 9%, if you discount where they get 3% less rather than the same amount of every other manufacturer in america, i believe we can provide additional charts that will fairly reflect other views. >> [inaudible] reserving the right to object, i would be happy to have you submit that, and we will then, of course, engage in a colloquy through the record where we will respond to what you're suggesting. withdraw any objections and just be delighted -- >> look forward to it, thank you. >> if i could just do one last question for mr. woolard before yielding to the gentleman. mr. woolard, you stick by the statement you said just a few
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minutes ago that there was no political influence exercised in the decision by the d. of energy to grant you -- department of energy to grant you 1.6 million in the loan guarantee? >> yes, sir. to the best of my knowledge, this project was judged by its process. >> the gentleman from ohio. >> i don't often share the concerns and objections of my colleagues on these kind of matters. matter of fact, my opening statement made it very clear i have a different point of view, but i have to say this issue of potential political influence on these loans ought to be looked at. that's why i'm going to submit to the record a letter to secretary chu there governor arnold schwarzenegger that supports brightsource energy's
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project application. >> if gentleman would -- >> i'll -- >> i would join with you in encouraging that. as you know, my former governor was the author of those mandates that created the very opportunity for these businesses to have a 20-year guarantee with coerced forcing of public utilities whether it penciled out or not to have renewables. >> well, reclaiming my time i just want to say -- let me ask the chair -- >> without objection. >> -- would the chair then invite our friend, governor schwarzenegger, to this committee to explain why he supported the same brightsource energy project that the obama administration supported? so either have here a case of bipartisan influence or bipartisan agreement and the result could be good. we may actually have here one of those extraordinary moments where we have leaders on both sides of the aisle that agree and support a project that should have been supported. >> i join -- if the gentleman
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would yield, i will personally call my dear friend, governor schwarzenegger, former governor, and invite him. i suspect that if he can get away from his busy schedule of new movies, that he will honor us with his presence, but i will personally call him. >> that would be great. thanks, mr. chairman. i'd like to -- you've got the letter there. i'd like to now go to my questions. and i think that based on the clock i probably have five minutes. be. [laughter] okay. >> i'd ask unanimous consent that the clock be reset to at least six minutes. [laughter] >> thank you, mr. chairman. see how well we can get along? [laughter] now, the majority published a report this which they concluded, quote: the committee identified many cases where the doe disregarded their own taxpayer protections, ignored lending standards and eligibility requirements and, as a result, amassed an excess i
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havely risky loan portfolio. bloomberg government came to a different conclusion. bloomberg recently studied doe's 1705 loan guarantee program. the l of that report is beyond solyndra: an analysis of doe's loan guarantee program. i ask that it be placed in the record. >> without objection. >> bloomberg concluded it's, quote: composed of predominantly lower-risk project. question, mr. katss, is the majority correct or is bloomberg government, and did doe amass an excessively risky portfolio, or is it composed of predominantly lower risk -- by the way, i want to ask that the slide shown within the entire portfolio, can we put it up on the monitors? finally, mr. kats, i've got brief answers, i've got a whole bunch of questions in the next five minutes, so could you give me an answer? >> i think bloomberg is pretty
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clearly right, and the fault rate is one-quarter of what's budgeted. that's the bottom line. >> okay. the slide shows the vast majority of projects funded through 1705 were power generation projects. what is the difference between the risks associated with power generation projects as compared to manufacture being projects? mr. kats? >> power generation projects are typically based on long-term contracts with a utility or some other entity whereas a manufacturer, it's higher risk because it goes into the company. in some cases the companies have long-term contracts, sometimes they don't. so, again, the power generation contracts are very low risk because you've got long-term agreements to buy the power generated from the funded assets. >> so as i understand it, one reason why the portfolio can be considered low risk is because most of the projects that receive 1705 loan guarantees are for power generation, and doe required these companies to have long-term agreements in place with nearby utilities to
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purchase the power once built. this means the projects have a guaranteed income stream which greatly limits any risk of default, is that true? >> exactly. >> okay. now, mr. woolard, do you already have agreements in place to sell power to major you tells once -- utilities? >> yes, sir. all power sold for 20 years. >> and you did that because doe required that you have those agreements before you received any federal loan guarantee, is that correct? >> i believe that the loan guarantee depending on close long-term power purchasers. >> some may ask why the federal government should do anything that could cause loss of tax taxpayer dollars. mr. katss, why did congress design the 1705 loan guarantee projects? >> because these are projects that are probably otherwise unable to get funding. >> would it have been possible for doe to accomplish the goal of the law to spur technological advances without incurring any risk of losses? >> no.
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because those would have been projects that would have gotten private sector funding. >> okay. so you have congress appropriating $2.47 billion as a kind of insurance fund to cover project losses. that's about 15% of the total amount of loan guarantees. now, detractors of this program like to point to the bankruptcy of solyndra to discredit the entire program, but the actual amount of losses is much lore. i'm going to ask staff to show projected losses compared to much smaller actual losses. mr. kats, if congress set aside money to cover front losses and one or several companies ended up causing losses, would you say the entire program's a failure or it's working as designed? >> no. as a venture capitalist and as a pe investor, it's very clear when you make a portfolio of investments, you hope that many will succeed, you expect a few to fail. what's impress e about this doe loan program is how few have failed. by the time you anticipate all of the defaults coming through,
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only one-quarter of the default bees that were budgeted and projected will occur. so by any reasonable measure, this has been a successful program that should be extended and expanded. >> so do you expect the de235u89 rate of the 17 o 5 loan guarantee portfolio to exceed the 15% threshold that congress itself anticipated? >> no, it will be much less than that. >> so you expect it to be a quarter? >> correct. >> okay. and a quarter of -- >> a quarter of the 15%. >> asive i've said in my -- as i've said in my testimony, the program is performing better than expected, but how is it performing in terms of policy? spurring technological advances or not? >> shul. these are breakthrough technologies. we've heard from the ceos here that the u.s. military, this is one of their most important strategic objectives -- >> mr. ahearn, what do you say? >> the projects that we're building currently would not have been financed and would not
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be under construction if it were not for the loan guarantee -- >> is the program performing in terms of policy, yes or no? >> as it relates to the types of projects that mr. woolard and i and mr. fairbanks are discussing, yes, it is performing. >> well, the whole point of this hearing -- thank you -- it seems to me, is my friends on the other side of the aisle seem to believe the federal government should not invest in green energy technologies. one expects my friends to be pro-business, but on this committee we seem to have some confusion about that. mr. kats, ahearn and mr. willard, in the one second that remains, what's the risk of doing nothing? what would it mean in the long run if my colleagues got their wish 1234. >> you make the chinese very happy and the u.s. military very unhappy. >> mr. ahearn? >> well, maybe i differ slightly on some of these points. >> i'm out of time. >> he can answer.
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>> mr. woolard? >> i believe that we would lose u.s. competitiveness worldwide because building things up in our backyard is important. >> thank you, mr. chairman. thank you, appreciate it. >> i thank the gentleman. i'm confused again. which is it? is this loan guarantee program so great and these companies are so wonderful, this is apple pie, and yet mr. kats says they couldn't get funding in the private sector. >> maybe both. >> it can't be like, well, this is so wonderful -- >> well -- >> and we need -- [inaudible conversations] or mr. nelson didn't have any of that. again, i'm confused. so wonderful, and is the standard only a couple companies, only 2%, whatever the number is, are going to fail? >> would the gentleman yield? >> be happy to yield. >> i think that you have a witness who has presented he didn't need help, and we have other witnesses who say ha without this -- who say that without this we wouldn't be able to be competitive.
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so maybe both things are true. >> yield now to the gentleman from tennessee. >> thank you, mr. chairman. and thank the witnesses today. i think maybe only in congress can we come out and testify that the results are better than we thought they would be or, in other words, we are not failing as bad as we expected. and, you know, we look at, we look at this questioning today, and i look at it from the standpoint of the taxpayers, as we all should. mr. ahearn, it sounds like first solar is a pretty good, solid company? >> with yes, sir, it is. >> doing well? >> yes. >> okay. and without government help or taxpayers' help, you don't think the company would be doing this well? >> i think we would be doing very well without the help. we would not have been able to enter the u.s. utility market
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with these projects. >> okay. now, you said that the company has traded on nasdaq? >> yes. >> how did it rank last year in terms of other companies on the s&p? >> i'm not sure i understand what the ranking criteria would be, but if you're referring to the stock price, stock price declined last year in line with the industry. >> okay. in the '08 it traded at over 300 shares, is that right? >> yes. >> okay. and currently trades about $17 in? >> yes. >> if i told you it was the worst performing s&p stock in 2011, would that surprise you? >> it would be out of line with the strong fundamentals of our company, but i don't know of the statistics on the stock price. >> okay. you're chairman of the board and former ceo? is. >> yes. >> okay. do the executives at first solar have a lot of confidence in the company's performance? >> yes, they do. we all do. we feel like we've built a
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fundamentally, extremely strong company that's got a great platform to expand our markets and our business. >> do you know in 2008, or starting in if 2008 about how much money that first solar executives pulled out of the company? in other words, selling their own stock? >> no, i don't. >> $2.1 billion. and i think you yourself maybe pulled out roughly 400 million. okay. is that right. >> >> i don't know the dates, but i did sell stock over an extended period of time, that's correct. >> okay. well, this program that we're trying to decide whether it's good or bad, 22 of the 26 prospects on these loan guarantees were rated, basically, as junk. and so when you say the company's doing well, your executives clearly didn't have the confidence. they were pulling their own money out, but yet you think it's okay for the taxpayers to invest in this? >> well, with all due respect, i disagree with the statement that the executives doesn't have
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confidence. -- didn't have confidence. we've got a deeply committed team. there's a lot of money still invested on the part of that team, and we are focused and growing, and we are fundamentally strong, so i disagree -- >> okay, $300 a share to 17 for the executives, i guess you just got out, it was good timing? >> look, i sold my shares over a multiyear period under frank action that were fully -- transactions that were fully and properly disclosed -- >> okay, well, that's your business. let's move on. did first solar promise that the loan guarantees would enable first solar to build a new manufacturing plant in arizona that would create new jobs? >> no, we did not. >> could we put up slide three? okay. does that look familiar? >> i've seen this e-mail, yes. >> okay. would that insinuate that maybe they were pressuring them to move forward on this project
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to -- >> no, it would not. not at all. these projects were all evaluated independently on their own merits. the manufacturing facility which we hope to build at some point in mesa was in no way connected with the applications or the project. >> it was the status of -- what is the the status of the plant in arizona? >> with it's on hold. >> okay. so you're saying that wasn't used to entice the doe to package these loan guarantees, to president push them to appro? you didn't promise it would create new jobs? >> we did not prom be, the loans were not packaged, and it was not part of the process. the loans were evaluated specifically on each project's fundamental. >> okay. so the plant is not producing solar panels for the department of energy's loan guarantee projects? they're not producing those that first solar promised? you're saying they didn't
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promise that? >> did not promise that, no. >> okay. that's all i have for now. i yield back. >> [inaudible] >> i thank the chairman. doctor, i think your questioning's right in line. one of the things i think comes into play when we have these hearings is there's a question about respect, and i want you to understand that we do have the utmost respect for you, but i also want you to understand that the most basic responsibility i have is serving in congress, respect of the hard working american taxpayers that fund all these. all these projects that you're talking about. and i get confuse bed sometime as to where is it that we're really looking to protect and who is it that we're looking out for. and i've got to tell you, coming from the private sector, i've never had the luxury of having the government underwrite loans for me. i've always had to provide my own capital, my own character, had to provide everything from the private sector comes from yourself. and that sort of concerns me,
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mr. ahearn, i've got to tell you. your sec -- [inaudible] and maybe we can put up a slide, can we put up a slide that shows, i think it's on slide 17 maybe. because the doctor asked you about the mps be of your company -- the performance of your company. look at it, it goes from $303 a share, i believe? you know what it traded at yesterday? it was $15 a share. i'm not questioning your investments, i'm just questioning when you say you think it's doing quite well, why would you sell so much of your own stock in it? why would you cash in on it? >> let me give you the reasons why i think it's so fundamentally strong -- >> no, no, don't give me that. really, i don't think you're fundamentally strong at all. i think your shareholders are the ones that tell you. in the marketplace you're doing a terrible job. but whenever you sell your own
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shares of stock and the people on your executive board sell your shares of stock, you know, in august, august 9th -- 3th, 8th and 9th, you sold almost 700,000 shares of stock in a three-day period. now, you're voting with your feet. you're getting the heck out of a situation. say, i've got to get out of this. but what i would really like to do, i would like these hard-working american taxpayers to put money into my company. i'm the ceo, i know what's going on, i've been there from its birth, and i have so much confidence in that company that i'm going to cash out. i'm going to take my money and run, and i'm going to ask these hard working american taxpayers, just keep funneling money in because someday, somewhere out there this dream's going to come true. the hopes and dreams of a company that someday, this is the hockey stick, it's flat, and someday it's just going to go off the charts. now, we don't know when that day's coming, someday it's going
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to be there. i'm not going to be there to watch it, i'm cashing out now. i'm taking my money, and i'm running, but i want you folks who get up every day, go to work, clothe your kids, put food on the table, i want you to continue to fund this project because, you know what? someday this is going to be great. i can't imagine we sit here, and we listen to this, and the question comes up is, who in the world is funding these projects? it's not the doe. this is not the doe's money. this is hard working american taxpayers' money, and i'm so sick and tired of hearing about disrespect. we don't have respect for green energy, we don't have respect for these folks that put everything on the line. when you're getting out of something as quick as you can and asking taxpayers to go in deeper and deeper and deeper, what message does that send? >> i started this company in 1999 and spent over ten years of blood, sweat and tears -- >> and we started our company in
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1953. >> and investment in -- >> yeah, i understand, but i didn't have taxpayers bail me out. i've got the tell you, this is disappointing -- >> would my friend yield? >> 450 million you pulled out, is that right? >> if i may -- >> would my friend yield? >> no, not right now, mr. kucinich. >> i don't have the numbers. >> your sec filing, i do have the numbers. i do have the numbers. and to sit here and listen to this week after week and then go back out and listen, when i go back home and see people pay as much for a gallon of gas as they pay for milk, working two jobs to put food on the table, when i see people that worry about whether they're going to have a job next year, and we're telling them, don't worry about it, we're looking out for you. the respect comes from the american taxpayer. i have no respect for a situation where the chief executives take their money and run and ask the american taxpayers to continue to fund a
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project that went from $300 a share to $15 a share and you guys are doing well? i don't know where the heck you define well, but this is why the american people have a great deal of wonderment now in the lack of trust in the people they send to represent them. the doe made a horrible, horrible decision and continues to do that. so, mr. kucinich, i apologize for not creeding back to you, but it's hard when i've got to go back home and walk in western pennsylvania and watch people who can't make their car payments, house payments, can't educate their kids, and we find out we're pouring money down an open hole and the chief executive officers bailed out and asked the taxpayers to -- >> i ask unanimous be consent for the gentleman to have another three minutes and yield briefly to me. >> my time's up -- >> unanimous consent so you can have three more minutes. i share your passion for what happens with taxpayers' dollars that are involved in the
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investments. but i think what would be helpful is we could have the witness respond for a couple minutes and explain your position on this and address the concerns that congressman kelly has raised. >> thank you. thank you very much. >> gentleman may respond. >> the first point i would make is that the doe loans that we're talking about in this case were not made to first solar. this was not first solar's private capital, corporate capital funding. these loans were made to three projects that first solar is supplying product to that are owned by sophisticated utility investors with utility offtakes. so these are projects not funding to first solar. this is not the same kind of situation as solyndra or abound or these manufacturing loans. first solar's corporate funding is provided by equity funding
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which initially came through our venture capital company starting back in 1999. we took the risk that you're talking about should be taken by venture capital and not taxpayers. we took that risk. we were successful and able to bring the company public. as a public company, there is typically a replacement of venture capital money for institutional money. it is a very normal thing for venture capitalists once they take a company public to sell stock over time, get the proceeds so that they can go recycle that back into early stage companies. that's what happened here. the sales by me and and other people on the team have absolutely no reflection on our conviction and belief in the company and its fundamentals. and if i could just on the fundamentals of the company, look, we've guided through $3.5 billion of revenue this year. net income on a gap basis of around $350 million.
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operating cash flow of around a billion dollars this year. we've pointed out that we have multiyear visibility into demand that will continue to drive strong profits and cash flow, and we're now expanding into emerging markets without the need for subsidies taking what we've demonstrated with the benefit of the doe loan guarantee program and deploying that through exports into other markets. what happens to the stock price day-to-day is subject to all kinds of things beyond our control, not the least of which are short interest investors. so i can't control that, i can't speak to it. i can control the fundamentals, and i'm telling you they're very sound. >> gentleman from pennsylvania wish to respond? >> no. and i understand everything you're saying, but i'm talking about your personal money. your selling 700,000 shares, and i get it. i get it, believe me, i get it. venture capitalists will always take a risk that's underwritten. the lower the risk, the more money they put in. these are loans that there
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really is no payback, this is a loan from a doe that really is kind of a, it's a gift. it's free money. it's free money. it really is. it's free money. you don't have the qualify the same way -- believe me, i've been it every day of my life. i've had to wore remoney, have my -- borrow money, have my own skin in the game. i just came from disney world, by the way, there's a fantasy land down there, too, you actually have to pay your own way there, you don't get it for nothing. but when you tell me as ceo, if steve jobs had done that, if bill gates had done that, what do you think these people would think of that? yeah, you know, jobs is getting out of it, must be a good investment. gate cans is getting out of it. these guys aren't pulling out. so what was the reason for you selling 700,000 shares in a three-day period? why? and the other thing is, why don't you buy it back now at $15 a share? it's got to be a real bargain. >> i think i -- >> just think what you could buy with the 450 million you got.
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>> i will go to -- if ranking member of the full committee is ready, i will go to him. i can go to mr. mulvaney -- >> i'm ready. thank you very much. >> go right ahead. >> first of all, this question is for our loan guarantee recipients on the panel. each of your companies received loan guarantees for projects you're currently advancing, and i believe it's legitimate and appropriate for members of congress and the taxpayers to ask what you're doing with the money. and i'm sure you would agree with me. can each of you articulate or a few of you for this committee why you believe the loan guarantee provided by the government to your projects is a good bet? in other words, what are the taxpayers getting in the return for their investment? because i don't want people to look at this on c-span and think they're not getting something out of it, that is, the taxpayers. would one or two of you try to answer that as best you can? yes, sir. in.
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>> i'd be happy to, yes. in the case of first solar, there are three loans that have been made to projects, large power plant projects in california, that are owned by sophisticated energy companies. these loans have been investment-grade rated, so the taxpayers, first of all, will receive a return of all of that money, $3 billion. they will make a profit in addition to that that totals roughly a billion dollars. the funding is allowing for roughly 1200 construction jobs over the life of the projects. it is further enabling the industry, the renewable energy industry in the u.s. to continue to grow and become profitable and export-oriented which will in turn create more jobs. so this will prove to be a very prudent and timely -- >> so it really does have a multiplier effect, does it not? >> yes, it does. >> mr. fairbanks, could you
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answer that same question? >> yes, sir. we received $98.5 million loan from john hancock backed by the doe loan guarantee. and the 1705 criteria. there was a job criteria, we did create a significant amount of new jobs and another part of the criteria was to allow companies to obtain senior debt financing. we had borrowed money to construct the plant on a mezzanine level, and we used a good part of the money to put in place senior debt financing and replaced some of the mezzanine debt. >> let me just ask this. doe filed a mandate from congress when it created the loan guarantee program, then each of the products under your stewardship has some risk associated with it.
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mr. woolard, can you explain why it is so difficult to find financing in the private sector when bringing innovative technology to scale? >> sure. we received our early backing as a company from venture capital. we financed the company, we then brought corporate investors in including chevron, british petroleum and others. and as we looked at scaling up, the first thing we did was derisk everything with a demonstration facility and grew that from a six megawatt facility that we did in israel to a 30 megawatt facility for chevron. and then to go to the large-scale power plants that had been proven there was not technology risks, but to do it at the size is and scale that was needed, the loan guarantee enabled that transition. and can i'd like to answer your first question as well on what the project is doing well for the taxpayer. we have a $1.6 billion loan guarantee that enabled a $2 billion project. more importantly, behind this
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there are ten more projects that we have contractual commitments or power purchase agreements to build that'll be $10 billion that will be commercially financed. so this enables the transition from a loan guarantee program to commercial financing, and i think that's very important. >> would you have been able to do all of what you just said without the guarantee? is. >> no. we would have likely done a smaller -- we wouldn't have been able to do it at the scale that allowed us to commercial ice. >> the reason why i'm asking these questions is i think it's very easy to demonize programs, and then a lot of times we don't hear the other side of it, and that is the benefits that the taxpayer gets, the benefits that, you know, it's a situation where you have government working with private industry, we always talk about creating jobs, and all three of you all have talked about jobs being created. but you're also talking about innovation, am i right? >> yes, sir. there's quite a bit of innovation. >> and in what sense?
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how so? could you just talk about that for my last ten seconds? >> well, we build solar thermal products in the 1980s that used an older technology called parabolic trough. we were able to move to a higher technology because of this program, it would enable that technology shift. >> thank you very much. and one thing, other thing, mr. chairman. as i -- i ask that my opening >> without objection. >> are we now turn to gentleman from south carolina's recognized. >> thank you, mr. chairman. also, to the ranking member, mr. kucinich, for allowing me to participate. gentlemen, i'll be honest with you, on several levels this hearing has been very difficult for me to sit and watch as somebody who comes from the private sector. it's not easy for me to sit here and watch you have to defend things that ordinarily wouldn't be any of our business. mr. ahearn, what you do with your investnt


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